The Russian Economy
LUKOIL’s position is inexorably tied to conditions in Russia. Before the fall of Berlin wall in 1989 and the collapse of the Soviet Union, the Russian oil industry was government-owned within a command economy. In addition, the Soviet Union followed an inward-looking economic policy that depended minimally on foreign trade. In fact, a government monopoly handled all foreign trade and did not always relate prices to production costs. Russia priva-tized most industries in the 1990s; however, it has only partially privatized the energy sector because of its essentiality to national well-being. Russia faced abundant economic problems during the 1990s when it was transitioning to a a market economy. Among other factors, many newly privatized companies lacked sufficient management and marketing skills, especially for selling abroad.